Wednesday, November 16, 2011

The loss settlement conditions of the property coverages of homeowners policies comprise an area where the policies of various insurers are likely to substantially differ. Thus, a somewhat more generic discussion is appropriate. The issues that arise under the loss settlement conditions involve the collision of and interaction between a number of concepts and policy provisions, including:

policy limits;

the concept of insurance-to-value and the effect of your failure to maintain sufficient insurance-to-value;

the concept of repair or replacement with like kind and quality along with the related concept of betterment.

POLICY LIMITS AND INSURANCE-TO-VALUE

The availability of coverage for dwellings and other structures is crucially dependent on the concept of insurance-to-value. The policy limits for these coverages are stated in the policy's declarations. Choosing adequate policy limits is a crucial decision. Adequate insurance-to-value is a precondition to the availability of any of the varying forms of replacement cost coverage as may exist or nominally be provided for in your policy. Homeowners Insurance Agencies FloridaNo one should consider, insuring only to actual cash value. Insuring to actual cash value makes it a virtual certainty that you will have only partial coverage in the event of a loss. In the event of a moderate loss, insuring only to actual cash value could make the difference between being able to repair your home and replace your contents and being forced to abandon your house.

The concept of adequate insurance-to-value is another reason why your agent's knowledge and expertise is crucial. He or she needs to be up to date on current construction and materials costs. All insurers and their agents rely on regionally adjusted construction costs guides for recommending and setting dwelling policy limits. Some of these guides are better, more realistic, and more current than others.

You need to be able to describe your home to an agent when seeking a quote accurately - that includes square footage; number of stories, when built, type of construction (frame, stucco, brick); type and age of roof; typeof electrical and plumbing systems; type of furnace and water heaters; etc.

The list goes on, including any special or unusual features that apply to the home. These can include such things as decks, awnings, swimming pools, patios, canopies, and unusual masonry or stonework.

This is especially important if you have unusual separate structures whose values are likely to exceed the standard policy limits provided. Many insurers arbitrarily set the policy limit for separate structures at only 10% of the dwelling limit. If you have a guesthouse or other unusual, higher than normal value, separate structure on your premises, you need to provide the agent with as much detail about that structure as you do for your main house.Similar comments apply to a garage with a finished space such as a bedroom, office, or studio or a photographic darkroom. Homeowners Insurance Agencies Florida

Tell your agent everything about your home and property's features that you do not want to have to spend your own money on to repair or replace if your policy limits turn out to be inadequate to cover a loss. Do everything you can to avoid under-insuring - assure that you have sufficient insurance-to-value. You are far better off over-estimating necessary policy limits rather than underestimating them. You are probably going to need to do some homework and will potentially need to be a little bit pushy to assure adequate insurance-to-value. A failure to maintain policy limits at a level sufficient to qualify for whatever form of replacement cost coverage your policy provides can have the result that your loss will be covered only on an actual cash value basis.

When it comes to your home, you cannot really rely on real estate values as an indicator of actual cash value for insurance purposes, because the sale price of real estate includes the value of land and does not necessarily reflect construction costs. That's why understanding what construction costs are or can be is so crucial to the concept of insurance-to-value.

Each insurer defines replacement cost differently. There are six general categories of coverage for disclosure purposes as to the different forms of replacement cost coverage. From these general categories you can develop the right kinds of questions to learn what levels of coverage your insurer offers, what policy limits you need to carry to qualify for each level of coverage, and thereby to determine whether you want to seek alternative quotes for differing from other insurers.

Next post, we'll highlight six different levels of coverage you can take note of. Make use of these information to claim your necessary rights. Remember, over-claim is better than under-claim. To get more information, you can get Homeowners Insurance Agencies Florida.